In the Current Year, Tim Sells Section 1245 Property for $28,000

Multiple Choice

In the current year, Tim sells Section 1245 property for $28,000 that he had purchased 6 years ago. Tim has claimed $7,000 in depreciation on the property and originally purchased it for $20,000. How much of the gain is taxable as ordinary income?

A) $7,000
B) $8,000
C) $13,000
D) $18,000
E) None of the above is correct